2019 First Quarter Investor Update Video

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Ryan Boykin, Atlas Co-Founder and Partner provides perspective on what’s going on in real estate, with our company, recent interactions and more. Our team has a unique perspective as owners helping owners, so it is easy for us to put ourselves in our investors’ shoes. Everything we encounter shapes how we help you get the most out of your real estate. 

Stay tuned for additional quarterly messages.

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Hello. My name is Ryan Boykin and I am Cofounder of Atlas Real Estate Group. And this is a new opportunity for us in Atlas, myself, to give a little commentary on what’s going on in our world to people that we serve every day, people that are clients of ours and customers, residents, sometimes even vendors. But this is a new sort of opportunity for us to give a thought or two of what’s on our mind about real estate, it could be about something new that’s going on in our company, it could be about a recent interaction. So, hopefully you’ll take a few minutes to tune in on this. We’re going to do it once a quarter. We’ll usually try to keep it pretty brief and to the point. And I think that in learning and watching these videos you’ll get an opportunity to learn a little bit more about who we are, why we think the way we think and what we think has made us successful as a company and how we can help others to be successful in their endeavors as it relates to real estate and property management.

So, with that I’d like to start by sharing a little bit of our history because I think a lot of the people that we serve today aren’t really familiar with how we got to be where we are. We manage about 2500 units of property management across Denver metro and Colorado Springs metro areas. We also do a lot of investment brokerage probably to the tune of 30 or 40 deals a month wherein we help people to identify a long-term investment asset that they can purchase and turn into a rental property. And all of that under the trajectory that we like to create wealth through rental real estate and really a long-terms savings device.

The third components of our business that I share with you is that we work with Zillow, Zillow.com, Zillow Group as their exclusive real estate agent here in the Denver metro marketplace as they have developed a new program wherein they purchase homes, renovate them in a short period of time, usually two to four weeks, and then we sell those homes on the open market. So, they usually end up owning a home anywhere between 30 and 60 days from start to finish. And right now we’re doing about 25 or 30 deals of those a month for them in purchase, and then of course those will turn into sales in another 30 days or so.

Another part of our business that a lot of people aren’t familiar with is our relationships with some of the institutional investors that have built really nice portfolios of detached single-family real estate across the United States. With a couple of these partners in particular we’ve purchased about 2000 or 3000 detached single-family homes that have been put into a rental pool and that rental pool is part of a national program, that now as a publicly traded company, for one of these big institutional partners. So, we’ve been doing that for the last five or six years. So, it’s kind of a breadth of Atlas Real Estate Group. Sometimes people work with us and they only get to see one part of it. Those are sort of the four primary components.

But really even stepping a step further back in time what I like to look at is we began our business the backbone of our business was all about owning real estate and it will always be that way. In 2008 I wasn’t in the real estate world I was in a completely different entrepreneurial world of private equity and all this other crazy stuff. And then when the market collapse happened in 2008 I thought to myself geez, real estate is on sale, maybe this is a good time to buy a little bit. So, now we have a real estate portfolio that’s made up of single-family, multi family, industrial, office assets, retail, mixed use urban infill, all sorts of different asset categories across four different states. And the thesis on everything that we own is really based on the notion that when you buy an investment property it makes a lot of sense to hold it and hold it for the long-term. And in some circumstances it might make sense to sell a property, but more so my thought process is I have a long runway ahead of me and even folks that might to be 10/20/30 years older than me often times have a long runway ahead of them. And if you hold real estate for the long-term you often times are able to really benefit in the appreciation of that real estate asset, the debt reduction of the real estate, as well as the rents.

So, that’s a little bit of history about us. I think that the ownership of the real estate that we’ve owned over the last ten years has really been super helpful in us being a better service provider in the other category of our business in property management and giving advice to folks that want to buy an investment property. Because we’ve actually had the experience of owning the asset first and frankly getting our teeth kicked in doing things the wrong way and then finding the way to do it correctly and leveraging that for the benefit of the folks that we serve in the property management and in the investment brokerage. I could probably share stories all night long about some of the foibles and difficulties that we had along the way in owning assets and buying them on the auction doorsteps and all that good stuff but I’ll leave that for another day.

So, I do think what I’d like to share as sort of the other component of this little video update is really our investment thesis as an organization. We buy real estate predicated on three things: now first off you need to understand that any real estate that I buy and any real estate that I’m going to recommend to anybody else is going to be a long-term oriented advisory decision. I really don’t believe in the short-term nature of real estate in most cases, and there’s some really good reasons for that and I’m sure we’ll talk about that in some venue sometime in the future. But the three items that we really focus in on when we look at buying real estate, first and foremost, is the real estate that I’m looking to purchase located in a 20-year market? So, what is a 20-year market? Put really simply, if I asked you today real estate in Denver, how certain are you that the price today will be higher 20 years from now? Well, for me it’s almost a lay down it’s almost a complete certainty that real estate in Denver will be worth more 20 years from now than it is today. So, if I can say that about the market that I’m purchasing in then I think it’s a 20-year market. Compare that to another market. Look at Detroit 20 years ago. If you would have bought real estate in Detroit 20 years ago that would have been going the wrong direction. That’s a very exaggerated example, but I’m trying to illustrate the point that not all markets are going to appreciate, not all markets is it a certainty that you’re going to go from here to here.

Now, that brings me to my second point and the second premise of our investment thesis. We know that the picture over 20 years is probably going to be a strong picture, but we also know that along the way we’re going to have blips in the market and it’s going to go like this so we need to have cash flow in the investment that we purchase. This is a big reason why when people provide me with a land opportunity I don’t get very excited because a land opportunity doesn’t provide any cash flow. I’m always going to look for at least a decent coupon after considering all of my expenses, the taxes, the debt, the property management, the maintenance, at least a decent coupon on my down payment, my investment into that asset. And if I have that that ensures two things: one is that I’m going to get some yield and some return on my investment every single month in the form of the rents and the cash flow that come from those rents, but two, when times are bad and when we’re in that downturn I’m still going to have cash flow that’s going to keep me in the game. And having that cash flow is going to enable me to go over that 20-year period and enjoy the appreciation that happens there. So, I think back to 2008, ’09, ’10, ’11 when I was buying thousands of properties out of the foreclosure auction, a lot of the real estate that I purchased was amazing real estate and it made no sense whatsoever that somebody would lose that real estate investment to the foreclosure auction. But the reality is the reason why they lost it is because they didn’t have cash flow, they didn’t have a way to service that debt and service those expenses and wait it out for the longer term until they could enjoy that appreciation in a better market environment.

So, first thing is a 20-year market. The second thing is cash flow. The third investment premise, the third premise of our investment thesis is path of development. So, I require that I understand the market that I invest in so well that if you give me any address in Denver I can tell you exactly where that is, exactly the main cross streets and exactly what’s going on there. I want to know it to that degree to understand what components of the city are getting stronger, what components of the city are getting weaker, what the crime looks like, what the schools look like, what kind of amenities around there might be in development, already being developed or are in plans for the future. And based on that I can make a bet in an area based on the likelihood that that area is going to have a path of development, an appreciation story that’s even better than the general market.

Look, Denver over the last 50 to 100 years has appreciated about four percent a year give or take. And if you look at the national average across the United States its three and a half a percent over the last 100 years, Denver out performs that a little bit so that’s great, that’s my appreciation, that’s my 20-year market commentary. But if I can bet correctly on the path of development in an area then I’m going to outperform that four percent and I’m going to appreciate even stronger. Now, in order to get to that appreciation I might need to wait five or ten years because I don’t know how long it will take for that area to develop. But this usually means that I’m not buying the best grade A classy sexy A+ location in downtown Denver, for example, I might be buying in an area that’s a concentric circle outside of that or two concentric circles outside of that. And as a result I have the cash flow that enables me to wait while the city develops and comes to me to an extent. And sometimes that’s the thesis and other times it might be the Anschutz Medical Center in North Aurora, which is an area that I invested very heavily in in mostly 2011 and 2012. Look, if you put $5 billion down in the middle of a ten block radius there’s going to be a nice ripple effect and that’s the thought process of the appreciation story that comes around this.

So, that gives you a little bit of background on how we got to where we are, it gives you a little bit of background on the different facets of our business, property management, investment brokerage, our operation and opportunity with Zillow, as well as what we do for the institutional partners. And then the final piece is we own real estate and we always will. And it also gets you into our head a little bit on how we think about the investments that we make and it probably sheds a little bit of light that most of what we do is very long-term oriented. I’d say that’s the case with the real estate that we buy and I would definitely say that’s the way we treat our business Atlas Real Estate Group, we want to be here doing this for a very long time. Thanks a lot for your time.